Firstly choose and create a folder which will contain all the development environment (i.e. C:\RailsPortableEnv) and don't use weird characters on the folder name and on its complete path. Inside this folder create the following folder organization (this is only a suggestion):

Inside the ruby\ruby folder extract the ruby files downloaded on (1).

Extract the RubyGems file into ruby\rubygems

Move the self-extracting file you downloaded on (3) inside the ruby\devkit folder. Run the file and click right away the Extract button right away because it will extract the files to this folder.

Now lets start building a console to use the Ruby on Rails and Development-Kit binaries and funcionallities

You can now run the console.bat executable and have a console in which you can create and run Rails projects

Rails will be installed through ruby gems with the following steps:

Run the console ( console.bat )

Input the following command: gem install rails

If the console was properly set the gem installation will detect the development kit and will build the gem that require compilation

Test your rails installation by creating a rails project

Create the directory Projects\InstallTest

Run the console and enter the created folder

Input the following command: rails new .

If no errors are reported then your installation is ok

Now for the optional configuration of the IDE with debugger follow this:

Inside eclipse folder extract the content of the file downloaded on (4)

Install the plugins for ruby development found in the DLTK plugins in eclipse site

Run the eclipse IDE and when you are asked for a workspace location insert ..\..\Projects and check Use this as the default and do not ask again to prevent future mistakes. This way you will always have your projects inside the portable structure.